Electrical Equipment Industry

Introduction

The study is related to the Electrical Equipment Industry, the Electrical Equipment Industry tends to be more cyclical than the majority of groups covered by Value Line in terms of product demand. Sales are tied largely to overall economic conditions, with an emphasis on the industrial, utility, and construction sectors. Earnings may also be driven by consumer based industries, including electronics and automobiles, as well as capital spending by manufacturing firms and government outlays. On the cost side, too, fluctuations in the price of commodities, such as steel, may significantly affect profitability among this group.

The Electrical Equipment industry includes major suppliers of electrical and electronic products, such as Cooper Industries (CBE), Emerson (EMR) and Rockwell automation (ROK). There are also numerous other participants that fill a particular niche, such as wire and cable maker General Cable (BGC), audio products manufacturer Harman International (HAR), and lighting equipment producer Acuity Brands (AYI).

The study also focuses on the performance of three companies that include Cooper industries, Emerson electric company and Rockwell automation along with the industry analysis.

Electrical Equipment Industry

Overview

The Electrical Equipment Industry consists of organizations which make various products for the assorted customer base. The Electrical Equipment Industry is fragmented; however, there are a small number of members that place claim to a considerable part of sales. The products of EE industry include electrical motors, industrial and commercial lighting fixtures, air conditioning systems, heating conditioning systems, components and ventilation and among others, electrical power equipment. The operating structure involves the high fixed costs. In addition to this, steel, aluminum and copper are necessary raw materials used in the manufacturing of the products. Moreover, the fluctuations in the prices of commodities may have an impact on the earnings performance of the companies. The Electrical Equipment industry spans all corners of the world, and it is a matter to the influence of the macroeconomic cycle.

SWOT analysis of the EE Industry

Strengths

The trends in the electrical equipment industry that include top and bottom line trends are often track the broad economic cycle. During the time of stability, when they are glow with cash, clienteles are contented for growing their capital budgets and making expenditure on the electrical equipment. Every now and then, when there is uncertainty about the trend of the economy, those controlling the purse strings delay decisions about the expenditures which can make its impact operating results in short term. Moreover, when conditions businesses are extremely tough then the clienteles mighty possibly change their decisions in relation to their equipment orders. Organizations try to replace and repair equipments during cyclical, regular or seasonal time periods. In addition to this, it is observed that the managers attempt to makes longer the useful life of equipments as long as possible.

Weaknesses

Initiating coverage on electrical equipment with an underweight rating; domestic thermal weakness is largely ignored by the markets so far which could easily become the overwhelming factor for the electrical equipment industry.

Domestic weakness offers little top line growth. For instance, if China were to build ...